The US stock market experienced a significant downturn on Thursday, with major indexes reversing gains from an early morning rally. Despite positive business news, including strong sales from AI leader Nvidia and retail giant Walmart, better-than-expected hiring data, and a rise in home sales, investor anxiety remained high. The S&P 500 fell by 1.6%, the Dow Jones Industrial Average dropped 0.8%, and the Nasdaq closed down over 2%. Nvidia, which had initially surged, saw its shares decline by more than 3%. James Stanley, a senior analyst at StoneX, noted the unusual market reaction, stating, ‘The reaction is noteworthy because what should have happened, didn’t happen.’ Bitcoin also fell below $90,000, its lowest since April, partly due to concerns over AI valuations. Despite Nvidia’s robust earnings and CEO Jensen Huang’s dismissal of overvaluation fears, Wall Street remains wary of an AI bubble. Alphabet CEO Sundar Pichai recently warned of ‘irrationality’ in the AI boom, while Oxford Economics analysts described the tech sector’s decline as a ‘healthy correction.’ Investors are also uneasy about the Federal Reserve’s interest rate decisions, awaiting delayed inflation data that could influence future rate cuts. The S&P 500 is on track for its worst month since March, with investors grappling with economic uncertainty and potential inflation risks. Eric Teal, CIO at Comerica Bank, highlighted the mixed September jobs report, which added 119,000 jobs but saw unemployment rise to 4.4%, leaving questions about the Fed’s next moves. Teal emphasized that continued AI adoption and lower interest rates are crucial for sustaining market growth, but growing fears of an AI bubble and inflation could increase market volatility.